Quantitative Techniques of

Working Capital
Management

Presented By:
Deepika Sachdeva
Nishtha Gandhi
Vibhor Khandelwal
 Working Capital
 The money needed to fund the day to day operations of
your business.
 It ensures that you have enough funds to pay your debts
and meet expenses as they fall due, particularly the start-
up period.
 Right Level of working capital: It depends on the industry
& particular circumstances.
 If your working capital is too:
 High: your business has surplus which are not earning a
return
 Low: indicate that your business is facing financial
difficulties
Working Capital Cycle
Cash

Debtors Creditors

Inventory
 Working Capital Management
• Managerial Accounting strategy that focus on maintaining
efficient levels of both components of working capital.
• It ensures that a company has sufficient cash flows to meet its
short term liabilities.
• It is an excellent way for many companies to improve their
earnings.
2 Aspects of W.C.M

Ratio Analysis Management of Individual

Components of WC
Why managing Working
Capital???

Short Term Liquidity

Trade Off Between

Profitability & Risk

Determining The
Financing Mix
 Accounts
Inventory
Receivable
Management
Management

Cash Short Term

Management Financing
Management Of
Working Capital
 Monte Carlo Method
 Computational algorithms that rely on random sampling to
explain numerical results.

 Used to value & analyze instruments, portfolios &

investments by simulating the various sources of
uncertainty affecting their value & then determining their
average value.

 Provides flexibility and can handle multiple sources of

uncertainties.